The New Condominium Rules in Myanmar

22
March
2018

The Condominium Law (“Condominium Law”) was enacted in 2016 but could not be implemented due to uncertainty. In December 2017, however, the Ministry of Construction issued the Condominium Rules (“Condominium Rules”) to boost up the condominium market in Myanmar.

The key highlights of the Condominium Rules are set out below:

  1. Business license and permits required

(a) Business License

  • A foreigner or a foreign entity can be a co-developer of a condominium project and will need to apply to the Management Committee (“MC”) to obtain a business license as the developer.
  • The developer can be an organisation, partnership, individual or a group of individuals that have not been declared as insolvent or bankrupt.
  • The duration of a business license is 5 years and it may be extendable with approval from the MC.

(b) Permit

  • The developer must apply for a permit together with a business license to build the condominium.
  • If there is joint developer for the condominium project and the co-developer is a foreigner or foreign entity, then the applicant will need to submit either the Myanmar Investment Commission (“MIC”) Permit or MIC Endorsement together with the joint-venture agreement to obtain a permit.
  1. Requirements for condominium project with collectively owned land

Under the Condominium Law, the requirements are:

  • the building needs to be at least 6 floors;
  • the building is on a residential and transferable land;
  • the building is constructed on a land that is registered as a collectively owned land by the Registrar;
  • the building complied with the procedure described by the relevant departments and organisations; and
  • the building is constructed on a land that is more than 20,000 square feet.

Under the Condominium Rules, the specific kind of land that the condominium is being constructed on has to be on a residential and transferable land of private or state owned land which must be converted to a collectively owned land. The necessary documents and/or agreement between the land owner and developer related to such land must be registered within four months from the date of the agreement under section 17 of the Registration Act 1908 at the Registration Office.  A government owned land used for developing condominium must be first registered at the Collectively Condominium Registration Office with the approval from the MC.

Once registered, the MC will have to be notified within two weeks from the date of registration by the developer after which, the MC will then instruct the Registrar to register the land as ‘collectively owned land’.

The term for collectively owned land will be according to the land title documents issued by the relevant authorities. The term for collectively owned land can be extendable according to the procedure set by the relevant administrative department under the existing land laws.

  1. Requirements to sell

The Condominium Rules provide that the developer is required to show as evidence that there is a balance of 20% of the total cost or if there is a huge amount for the project, the relevant MC will stipulate such amount as deposit.

The developer may sell the units in advance after 30% of the foundations of the condominium have been completed. Such information would be informed by the developer to the Registrar under the stipulation of directions or notifications issued by the Department.

If the co-developer is a foreign person or entity, the developer has to inform the MC through the Registrar for the portion list of units which can be sold by foreign co-developer. If the developer or the co-developer wishes to sell to foreigners for each portion, it must not exceed 40% of the total floor area of a condominium which may be sold to foreigners.

  1. Restrictions on sale of units

The developer shall sell 75% of the units of the whole condominium to buyers in the market, and only up to 25% of units in condo may be registered under the name of a single purchaser.

  1. Registration requirements

The developer will have to register the units with the Condominium Registration Office upon receiving the building completion certificate. The Registrar will then issue the Unit Registration Certificate (“URC”) for each unit.

If the purchaser paid for the unit in full, both the developer and purchaser shall register the sale and purchase agreement within 30 days with the Registrar together in which under the current laws, the purchaser will be required to pay the stamp duty and registration fees.

After the registration of the documents, the URC will be signed and stamped by the Registrar. The person whose name is stated on this URC will be the legal owner of the unit and it can be used as a security for bank loan.

If the unit owner intends to transfer or sell the unit to another, then he will have to register the transferable documents in the same registration process method with the Registrar. The unit owner shall maintain the insurances described by the MC.

  1. Foreign ownership of condo and/or a share of land

Section 17 of the Condominium Law provides that land which has been registered as collectively owned land may not be owned in the name of any department, organisation or person and shall exist as collectively owned land to which all the co-owners are entitled to.

Under Section 36 of the Condominium Rules, a foreigner who purchases a unit in a condo is entitled to own the unit according to the term of the condominium.

Regarding the above two sections, the law says “all co-owner are entitled to the collectively owned land”, and the Rules says that “the foreigner having purchased a unit in a condominium is entitled to own the unit for the term equivalent to the term of the condominium.”

It is unclear whether the word “term of the condominium” refers to the period of such term set by the developer or until the condominium is actually dismantled. If in such case, then the developer may decide the term set to reconstruct the condominium and the foreigners may have a risk of losing their condo unit at that time.

According to section 28 of the Condominium Law, the whole or part of the condominium building shall be dismantled and then reconstructed if 75% of the members vote in favour.

If you have any questions or require additional information, please contact Geraldine Oh or Thit Thit Kyaw or the ZICO Law partner you usually deal with.


This alert is for general information only and is not a substitute for legal advice.